Capitalism at the Crossroads: Aligning Business, Earth, and Humanity

I remember the day I came home and told my parents that we needed to put a brick in the toilet. We should also get a new showerhead. And we should recycle too, and start a compost in the backyard. We did all those things, and much more.

It was 1990, and as a Jr High student, I was riding my bike to downtown Palo Alto, CA, to volunteer every week at the Earth Day 1990 headquarters. I made photocopies, I assembled informational packets, I researched a variety of environmental topics, and I wrote an article about dolphins getting caught in tuna nets. I asked a lot of questions, I learned a great deal about the environment, and I developed a passion for being environmentally conscious.

I recall that at the time I wanted to deliver a greater direct impact through my volunteering. I wanted my contributions to carry more weight.

Looking back more than a quarter of a century (!) on that Spring of volunteering at Earth Day 1990, I realize that my biggest and most meaningful contribution was the investment that I made in myself. As an eager and impressionable youth, Earth Day 1990 changed my outlook on the world, and that has been far more valuable than any number of photocopies or articles I might have produced in the hours after school. In truth, that’s what the movement was always about anyway – increasing awareness, generating participation, and inspiring action. I remember that my mentor at the volunteer headquarters, Peter, seemed very aware that my involvement was less about what I was producing, and more about how the experience could forever shape my view of the earth, and of my social and environmental responsibilities. Peter, wherever you are, thank you.

On April 22nd, 1990, my family took the train into San Francisco, and we made our way to the Earth Day festivities at Crissy Field. It was the 20-year anniversary of Earth Day, and the first year that the grassroots movement went international. Some 200 million people gathered that day, across 141 countries. I’m proud to have been one of them.

EarthDay1990.png

It’s been so long since that day that I can barely find a trace of the Earth Day 1990 logo on the internet. Since then, the environmental dialog and the consumer options have evolved significantly. Recycling is no longer a novelty, products everywhere are labeled as “Green”, “All-Natural”, “Eco-friendly”, and “Organic”, and we have more options than ever when we shop for light bulbs, paper products, water filters, etc. And while somehow there’s a controversy over global warming, it seems that there’s nonetheless general agreement about certain seemingly insurmountable global changes. As the planet’s population continues to grow, the air quality is getting worse, pollution is on the rise, species are going extinct, and the global competition for resources is increasing.

Where there are problems, there are opportunities. The business world has responded in a variety of ways, and many of these initiatives are encouraging. Consumers have access to so many options these days, from hybrid vehicles, to installing solar panels for their homes, to smart refrigerators, and so on. And yet, the environmentally appropriate, health-conscious, socially-aware options are still generally offered at a premium. As consumers, there’s typically a trade-off. To get the “right” product, you have to spend more.

Businesses seem to face a similar trade-off. Making the “right” decision for the environment, or for society, is rarely at the forefront of the company mission. Rather, corporations tend to focus on making money first, and then in some cases they give back later through philanthropic programs.

How can environmental and social initiatives be converted from expensive problems, to strategic business opportunities? How can multi-national corporations simultaneously profit and serve the largest but poorest socio-economic group in the world? What is the role of corporations with respect to accelerating the growth of global sustainability, and what is foundation for a business framework that champions sustainability as a model for success?

In Capitalism at the Crossroads: Aligning Business, Earth, and Humanity, Stuart L. Hart argues that environmental and social responsibilities need not be expensive corporate activities that disrupt core business lines. His framework is centered on win-win opportunities to serve the Base of the Pyramid (BoP), the four billion poorest people at the “bottom” of the global economy. Hart provides many case studies to illustrate how companies have successfully pursued and established corporate models that are innovative, profitable, and inclusive, as well as socially and environmentally responsible. These examples are intriguing and inspiring, and Hart leverages these accounts to articulate strategies and insights that apply to any and all companies.

As individuals, as employees, and as entrepreneurs, we should all challenge ourselves and each other to put our social and environmental responsibilities first as much as possible, and to create win-win opportunities rather than compromise with trade-offs.

Advertisements

From Bust to Boom: A Town Reinvented

Leavenworth, WA. It was once a bustling town on the eastern side of the cascade mountains. Then it went bust, and lost relevance. But the town rallied, a plan was made, the locals executed, and now it’s a booming community once more.

What a great example of stretching… starting with Inspiration to initiate change… followed by a Strategy to be executed… and ultimately leading to a model of Success.

Before the Bust
Leavenworth boasts of the proud heritage of the Native American Yakima, Chinook, and Wenatchi tribes, who hunted for deer and elk, and who fished for salmon along the Icicle River. Eventually, the area was settled by gold miners, fur trappers, and pioneers. However, when the Great Northern Railway laid its tracks by Leavenworth in the late 1800s, and the town became a divisional hub in 1893, Leavenworth was soon bustling with opportunity. Rail workers arrived and made Leavenworth their home. A dam was constructed nearby, to provide power for locomotives to travel through the tunnels of the Cascade Mountains. The Lamb-Davis Lumber Company was incorporated and established along the banks of the nearby Wenatchee River. A sawmill was built, and logs were floated down to the millpond for processing. A hugely successful fruit industry was launched along Icicle River and the neighboring valley. Ultimately, the influx of jobs led to a population boom in Leavenworth, reaching around 1,000 in the year 1906, the year that Leavenworth was incorporated.

Busted
Heavy winter storms, snowslides, and avalanches hit the Great Northern Railroad’s section through the Cascades. In 1910, one of the worst blizzards in the Cascades’ history led to the Great Northern Railroad’s decision to reroute the railroad tracks away from Leavenworth to a less hazardous stretch. As a result, the divisional hub was moved further east to Wenatchee. Then the sawmill closed in 1926. Businesses collapsed, the local economy suffered, the high school was condemned, and what had once been a thriving community became a desperate and desolate mountain town. Busted.

Inspiration
Two men from the community, Ted Price and Bob Rodgers, are credited with initiating a change that would alter the future of Leavenworth. They bought a Cafe in 1960, remodeled it with a Swiss-Bavarian theme, and named it the Squirrel Tree. With the beautiful mountains as its backdrop, the alpine-themed restaurant became a hit, and it sparked a movement.

Strategy
The townspeople came together, and in 1962 they formed L.I.F.E., Leavenworth Improvement For Everyone. Various community committees were spun up, and in 1964, it was decided to update the entire town to reflect an alpine Bavarian theme. Price and Rodgers organized a trip down to Solvang, a Danish-themed town in California, which served as an inspiration for Leavenworth’s transformation. Once the remodeling was underway, the marketing efforts to bring in tourists kicked in, including the establishment of various seasonal festivals.

Success
Today Leavenworth is a known tourist spot in the Pacific Northwest, and with over 2 million visitors each year, it is clear that the strategy initiated over half a century ago has led to long-term success. The Autumn Leaf Festival, Oktoberfest, Maifest, and the very popular Christmas Lighting Festival are just some of the main events that draw crowds every year. Affirmation of Leavenworth’s success include that it was cited in Time magazine as one of the Top 10 Places to Find Holiday Cheer, and that it was listed by The Lonely Planet as one of the Five great German towns in the USA.

A Recent Visit
After hearing from many friends of the fun that they had at Leavenworth, I recently took my family out for a long weekend to experience Leavenworth first-hand. We had a great time, and can now attest ourselves to the town’s hospitality, charm, and tourist appeal. There’s something for everyone at Leavenworth, and in our case, the fond memories include laid-back fireside dining at the Munchen Haus, ice cream cones, salt water taffy, miniature golf, a walk along the waterfront, play time at Smallwood’s Harvest farm, and an engaging visit to the bookstore, A Book For All Seasons, where we picked up Leavenworth (Images of America Series).

A Remarkable Story
The history of Leavenworth is fascinating, and as a California native who has biked through Solvang, the so-called ‘Danish capital of America’, it’s been interesting to learn about the connection between the two cities. The determination of the local Leavenworth community to put itself back on the map after going bust, and it’s ability to deliver on a creative and ambitious strategy to reinvent itself as an authentic Bavarian village is inspiring. It took great personal and financial risk on the part of the townspeople and business owners, and what was achieved is remarkable.

A Visual History
The historical pictures included in Leavenworth provide a poignant visual accompaniment to the story of a town that has gone through so much change in the past 150 years. The imagery of Native Americans, prospectors in front of their log cabins, and miners at the mine, are a reminder of days long gone by. Then the depiction of the railroad, the locomotives, the sawmill, and all of the business development that accompanied the period of early growth serve to highlight the major cultural and economic transitions that took place. Later, the impact of the L.I.F.E. program on the community, and the remodeling of buildings after the Bavarian theme, demonstrate not only the commitment and hard work that was involved during a difficult phase in Leavenworth’s history, but also the pride in the transformation that would lead to a new town identity.

The Next Chapter
I wonder what the future has in store for Leavenworth. I worry about the footprint of more than 2 million visitors each year, passing through a small town of barely 2,000 people. How long can Leavenworth support the increasing level of traffic? What is the impact on the local population, and on the environment? At what point does it become too much, and what will the town do to handle the burden of its own success? Perhaps the town is already being stretched to find new solutions, and maybe there are current challenges that require new sources of inspiration, new strategies, and new paths to success.

Christmas Miracle

Some years ago I had the privilege of working for a company that builds IVR speech applications for clients across a wide variety of industries, including travel, retail, and finance. That is, we provided that delightful experience you get when you call a company and speak to an automated system, rather than to a person. My responsibilities included working closely with clients, designing call flow experiences, partnering with developers to build speech applications, and leading the speech data science team to analyze and continually optimize user experiences.

One of my favorite clients was the Canadian airline WestJet. Our working relationship was smooth, their team was fun to work with, and they treated us well when we flew out to Calgary to visit them on business trips. I was also intrigued by their business practices. For instance, WestJet saves costs by operating a fleet of planes based on a limited range of aircraft. Every employee is a potential “owner”, thanks to a generous matching corporate plan. And, WestJet cares about its customers.

WestJet pulled off a remarkable Marketing stunt for Christmas 2013. A kiosk in the shape of a Christmas present was set up at the airports in Toronto and Hamilton, with which travelers on the two flights to Calgary were able to interact with Santa via a digital screen. Santa asked each person what they wanted for Christmas, and travelers obliged, sharing their wishes: a choo-choo train, an Android tablet, a warm scarf, a flight home for the holidays, a large TV, a diamond ring… Then, while the holiday travelers were on their flights, WestJet elves in Calgary scrambled to collect and package the items on the Christmas wishlist. Upon their arrival at the baggage claim, WestJet travelers were greeted by Santa and his elves, bearing the gifts that had been requested at the departure gates.

What a wonderful act of giving.

The YouTube video of the WestJet Christmas Miracle is about to hit 45 Million viewers. The cost of that scarf, those socks, that 50 inch TV, and even that diamond ring are all airline peanuts now, compared to the number of impressions and overall virality that this marketing campaign has generated. The Christmas Miracle has paid for itself many times over.

What a remarkable Social Media, Marketing, and PR success. (The Christmas Miracle has been been repeated in subsequent years, by both WestJet and its competitor Air Canada.)

WestJet’s Christmas Miracle is just one of many anecdotal stories shared in The Real-Life MBA: Your No-BS Guide to Winning the Game, Building a Team, and Growing your Career, by Jack & Suzy Welch. The Real-Life MBA is engaging, positive, motivating, and contains helpful, practical, and common-sense career advice.

A quick read, I found this book to be informative and grounding. It’s a pitch for leadership based on truth and trust. It’s an encouragement to seek your Area Of Destiny. It’s a refresher, a reminder, and a reinforcer of good practices and healthy perspective for every professional.

The Strategy Paradox

I remember the day my father came home, proudly, with a Betamax videotape player and a movie: Bedtime for Bonzo, starring Ronald Reagan and Bonzo the chimpanzee. Our very first home movie night via videotape ushered in a new era, in which we controlled what we watched.

Move aside TV Guide.

At the time, neighborhood video rental stores were popping up everywhere, and the nearest one to our house was but a short bike ride away. The convenience and affordability of selecting movies and watching them from the comfort of our own home was a new luxury. We could now select the right content (our movie picks), via the right channel (videotape cassette), and watch at the right time (whenever we wanted). That was “On Demand”, ‘80s and ‘90s style…

Be kind, rewind.

I recall vividly that video stores initially offered a wide selection of both Betamax and VHS videotapes. But at some point the balance started to shift, and the Betamax sections of neighborhood stores started to shrink, while the VHS sections grew. Eventually we were relegated to picking movies from just a single aisle, and then from just a couple sad shelves, at which point it became abundantly clear that we had placed our consumer bet on the wrong horse in the race to videotape market dominance.

What happened to Betamax? What led to its rapid surrender of market share to its VHS competition? Was the utter collapse of Betamax the result of an ill-conceived business strategy? Poor execution? Sub-par product? Misunderstanding of its customers?

In The Strategy Paradox: Why committing to success leads to failure (and what to do about it), Michael E. Raynor suggests that Sony’s Betamax suffered from the Strategy Paradox, whereby “strategies with the greatest possibility of success also have the greatest possibility of failure”. Raynor argues that Sony made reasonable commitments in a campaign built for market dominance, in which Betamax was a great product designed to provide customers with the best home movie experiences.

Sony made a strategic bet on product differentiation, by focusing on the optimization of high-fidelity picture and sound quality, at the expense of manufacturing. Matsushita’s VHS, on the other hand, pursued a cost leadership strategy, by offering a cheaper product that was easier to manufacture, and therefore to license.

Sony and Matsushita each hedged their bets on their strategic value propositions, for which there were many trade-offs. For example, with its larger cassettes and slower tape speeds, Matsushita’s VHS offered two-hour recording capability, while Sony’s Betamax tapes were just shy of the two-hour mark, which meant that they couldn’t be used to record two hour broadcast television movie specials.

The Strategy Paradox dissects the Betamax / VHS history in great detail, and also explores many other interesting technological developments, including the transitions from LPs, cassettes, and CDs, to digital media. Further case studies break down the competitive strategies employed by companies such as Microsoft, Johnson & Johnson, and the telecommunications industry.

Ultimately, Raynor lays out a framework that companies can apply to successfully navigate the unpredictable future. He suggests that strategic uncertainty should be managed by hedging bets on possible futures, in order to be best prepared for the unknown yet to come.

Back in the day when I rode my bike to the local neighborhood video store to pick up a movie rental, I was keenly aware of the shifts in product selection as a consumer. But I was oblivious to the cutthroat competition that was taking place between Betamax and VHS. There are many lessons to be learned here, with respect to product differentiation and company strategy, and if you’re curious to dig deeper into these questions, challenges, and mitigating solutions, I recommend checking out The Strategy Paradox.

Shortcut to Prosperity

Shortcut to Prosperity is an inspiring read that is structured around a set of great career recommendations. Mark Hopkins reminds us of the importance of pursuing our passions, because motivation is the burning fire that drives us, and that ultimately leads us to success.

Prosperity requires an active decision to initiate change, and the key is to take the first step, no matter how small. As change becomes habit-forming, the pursuit of additional challenges and opportunities fuels the cyclical rise to prosperity.

Mark Hopkins describes the natural tension between your current reality, and your vision for success, as the tension you might feel when you hold a rubber band between the fingers on two hands. To move towards your vision, and reduce the tension, you have to be willing to change the position of your current reality. Do something. Take a step. Today.